PNB Plans to Ask Govt. for Capital Infusion of Rs. 5,431 Crores

Following the assurance that Union Finance Minister Arun Jaitley made to state-owned banks about the government extending them support, it has been reported that Punjab National Bank (PNB) will seek an infusion of capital of Rs. 5,431 crores, the bank said in a filing to stock exchanges. This latest statement by the Finance Minister follows his earlier decision in July 2017 to infuse a total of Rs. 11,336 crores in five state-owned banks, a list that included PNB. The infusion was to assist these banks to meet their regulatory capital requirement.

Speaking about his recent assurance, the Finance Minister mentioned that these funds were going towards encouraging the cycle of NPA (non-performing assets) recoveries and credit offtake when he said, “I have assured them that we will immediately look at this subject because we are as keen as them, as every Indian is, that this opportunity is not missed because we want the cycle of high consumption, high growth, NPA recoveries, credit offtake really to be utilised to the fullest in order to help economy.”

The Finance Minister added that the banks had requested more proactive addressing of capital requirements shortfalls, “Some of them did mention that the PCA (prompt corrective action) guidelines should be revisited because that is indirectly impacting their lending ability and that government should be more upfront in the capital requirement of some of these banks.”

In October 2017, the government has announced that it would institute a plan to infuse public sector banks with capital to the tune of Rs. 2.11 trillion.